India’s domestic car dispatches to dealers climbed for the fifth straight month in February, supported by recent tax cuts that have lowered prices across most models, according to data from the Society of Indian Automobile Manufacturers (SIAM) released on Friday.
Passenger vehicle dispatches jumped 10.6% to 417,705 units in February, up from 377,689 units a year earlier, continuing the momentum fueled by tax reductions introduced in September 2025. These measures cut taxes on larger SUVs to 40%, removed additional levies, and lowered rates on small cars and two-wheelers to 18% from 28%, boosting demand across segments.
Rajesh Menon, SIAM Director General, noted that while March typically benefits from festive buying, the ongoing conflict in the Middle East poses risks. “The recent conflict in West Asia remains a concern and could impact manufacturing processes and exports,” he said.
The boost in sales has been supported by the ongoing wedding season, strong bookings, inventory build-up, and new model launches. Domestic demand is expected to remain robust, but analysts caution that exports could soften due to reduced shipments to Africa and the Middle East.
SIAM highlighted potential production risks from the Middle East crisis, including possible disruptions in gas supplies crucial for paint shops and component manufacturing. However, analysts expect only near-term impacts on Indian manufacturers, citing sufficient inventory buffers.
India, the world’s third-largest car market, has an auto industry that contributes 7.1% of the country’s GDP. Industry sources say that tax cut-driven growth is likely to continue for several quarters, sustaining momentum in the domestic market despite geopolitical uncertainties.